In recent months, President Donald Trump’s declaration of a 25% tariff on goods imported from Canada and Mexico has ignited a global ‘tariff war.’ This has put several countries, including the European Union, China, and India, under scrutiny. Interestingly, the situation intertwines with Harley-Davidson and its operations in India. In this article, we will explore the implications of Trump’s tariff strategies on Harley-Davidson’s pricing and sales in the Indian market.
Trump’s Trade Policies and Harley-Davidson
During a bilateral meeting with Prime Minister Narendra Modi, Trump emphasized the introduction of reciprocal tariffs. In simpler terms, this means that if a country imposes high taxes on American goods, the U.S. will retaliate with similar tariffs on products imported from that nation. This statement coincided with Trump’s remarks about Harley-Davidson’s struggle to establish its market presence in India due to excessive taxation.
“Harley-Davidson Struggled to Sell in India”
Trump pointed out, “We have now become a reciprocal tariff nation. We will do what is done to us. The taxes that India imposes on us will be reciprocated equally.” He highlighted how Harley-Davidson faced significant challenges selling motorcycles in India, attributing the issue to soaring import duties. In response to tax obstacles, Harley-Davidson was compelled to set up a manufacturing plant in India to avoid hefty tariffs, a move Trump believes the U.S. will also consider in the face of high taxes imposed by other nations.
Harley-Davidson’s Indian Operations: A Timeline
Harley-Davidson entered the Indian market in 2009, selling premium motorcycles amid a relatively low demand. The company established its dealership in 2010, but the complete built-up unit (CBU) imports faced a staggering tax of up to 100%. To mitigate these challenges, Harley opened an assembly plant in Haryana and began manufacturing models like the Street 500 and 750.
Withdrawal and New Partnerships
In September 2020, Harley-Davidson announced its withdrawal from the Indian market, yet it continued selling motorcycles through a partnership with Hero MotoCorp. Trump had previously highlighted the issue of high taxes faced by Harley-Davidson during his first term, raising the possibility that the current tariff war could lead India to lower import taxes on Harley’s models, potentially making them more affordable for Indian consumers.
Recent Developments: Harley Davidson X440 Launch
In a recent collaborative effort with Hero MotoCorp, Harley-Davidson launched the new Harley Davidson X440 in 2023, priced at an ex-showroom rate of ₹2.30 lakh. This new entry demonstrates the possibilities for Harley-Davidson in adapting to the Indian market despite previous challenges and sets the stage for continued interest in premium motorcycles in India.
As the U.S. and India navigate the complexities of trade and tariffs, Harley-Davidson’s situation underscores the broader implications of international trade policies on local markets and consumer choices.